×

This Trump trade is about to stall: Trader

One of the hottest Trump trades is about to stall out, according to one trader.

Shares of automaker Tesla have rallied more than 30 percent since the election and nearly 19 percent year to date.

This as President Trump named Tesla CEO Elon Musk to his advisory team in December.

But as the stock inches closer to 52-week highs, one trader is betting the rally has come too far, too fast.

"Options activity [Tuesday] was very short dated," Dan Nathan said Tuesday on CNBC's "Fast Money." "It lends me to believe that its traders who have been long who are playing the momentum may be looking for some short-term protection."



The trade that caught Nathan's attention was a buyer of 5,000 Jan. 27 weekly 250-strike puts for $2.40. Since each options contract accounts for 100 shares of stock, that is a $1.2 million bet that Tesla will close below $247.60 by Friday. Despite missing some key near-term production targets, Nathan said that investors seem pretty confident in Tesla's future as the company continues to manufacture and sell domestically.

Tesla shares were trading at the $252.76 level during Wednesday's session.


Options Action Newsletter:

Sign up to receive exclusive Options Action content. Each month you'll receive an exclusive message from host Melissa Lee and insight directly from one of the members of our Options Action panel. Keep your pulse on the market with the Options Action newsletter.

Please enter a valid email address
To learn more about how we use your information, please read our Privacy Policy.

Latest Video

Tutorials

Host Bio

  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

Options Action Traders

From Our Sponsor

Options Action Newsletter:

Sign up to receive exclusive Options Action content. Each month you'll receive an exclusive message from host Melissa Lee and insight directly from one of the members of our Options Action panel. Keep your pulse on the market with the Options Action newsletter.

Please enter a valid email address
To learn more about how we use your information, please read our Privacy Policy.